How your fee works
Nine short scenes. Water is your portfolio, the gold line is your High Water Mark.
Your money sets the mark
What you invest becomes the gold line. Fees only ever apply above it.
Growth above the line is new gain
When the market lifts the water past the line, the part above turns green.
Quarter end: 20% of the green
Only the green slice is charged. Then the line moves up, so it is never charged again.
A fall is never charged
The line stays where it was. The fall has to be recovered before any fee.
Your deposits lift the line too
Money you add raises the water and the line together, so it is never profit.
Withdrawals move the line with them
Taking money out is never a loss: the line comes down with the water.
Taking money out while ahead
The gain leaving with your withdrawal is settled now. The rest waits for quarter end.
Sold or not, it is the same
Gains count before you sell. Selling only swaps shares for cash of the same value.
Two ways to pay, same fee
Taken from the portfolio, or billed to you separately. The fee is identical.
More detail, in words
Booked and on-paper profit
Your profit or loss is made up of two parts, and your performance fee is based on both. Realised profit is what you have already booked by selling a holding — that money sits as cash in your portfolio. Unrealised profit is the gain on holdings you still own, valued at the current market price. Your portfolio value includes both, so the fee is worked out on your total position, not only on what you have sold.
Selling a holding and buying something else with the proceeds does not change your portfolio value — you have simply swapped shares for cash, or cash for shares, at the same value. So booking a profit does not trigger a fee, and reinvesting it is not treated as a deposit. Only market movement, or you adding or taking out money, changes anything.
Portfolio values are recorded after the market closes (the Indian market trades 09:15 to 15:30 IST), using the day’s official closing prices. Both the realised and the unrealised parts of your profit are checked at that point, so your statement reflects settled prices rather than a quote that was still moving.
Taking money out while ahead
If your portfolio is above the High Water Mark when you withdraw, the share of the gain you take out is settled at that moment (an interim performance crystallization): you are charged 20% of it, and the gain you leave invested waits for quarter end. Withdrawing everything just before quarter end therefore pays exactly the same fee as letting the quarter close first.
Two ways to pay
The fee is taken out of your portfolio. Your portfolio value falls by the fee, and your new High Water Mark is that reduced value. You pay nothing from your own pocket.
You are invoiced for the fee and pay it from outside the portfolio. Your portfolio is not reduced, so your new High Water Mark is your full portfolio value — the profit has been paid for, so it is never charged again.
The fee is exactly the same amount either way, and a single settlement leaves you in the identical net position. Over several periods the choice does make a small difference: paying separately leaves more money invested, which then grows.